By Yasin Ebrahim
Investing.com – The S&P 500 fell Tuesday, as tech led a sharp selloff just hours before Microsoft and Google are set to kickoff quarterly results for big tech.
The S&P 500 fell 2.1%, the Dow Jones Industrial Average fell 1.9%, or 648 points, the Nasdaq slipped 3.0%.
Microsoft (NASDAQ:MSFT) and Google-parent Alphabet (NASDAQ:GOOGL)fell more than 2% ahead of their quarterly results as investors aren’t showing any willingness to stick around to find out whether earnings from big tech will help steady broader market
Apple (NASDAQ:AAPL), Meta, formerly Facebook (NASDAQ:FB) were also nursing losses intraday, while Amazon (NASDAQ:{{6435|AMZN led the decline, down more than 3%.
Chip stocks also added to the weakness in the overall tech sector, with AMD and Nvidia down more than 4% as investors price the prospect of supply chain disruptions following surge in Covid-19 cases in China.
The mass testing in Beijing following an increase in cases has stoked fears that China’s capital could face Shanghai-style lockdown.
Treasury yields, meanwhile, continued to price in the prospect of risk of slowing global growth at a time when the Russia-Ukraine war, which continues to intensify, has returned to focus.
Russia's Foreign Minister Sergey Lavrov said that if the U.S. and its allies continue to provide Ukraine with weapons, there is a risk of the war escalating into wider conflict with NATO nations.
Beyond the wreckage in tech, financials also exacerbated the selloff, paced by a decline in regional banks amid weaker quarterly results and falling Treasury yields.
Zions Bancorporation (NASDAQ:ZION) fell more than 8% after Raymond James downgraded the stock to market perform from underperform after the bank reported first-quarter revenue that fell short of estimates.
General Electric (NYSE:GE), a major Dow component, slumped more than 10% after conglomerate’s cautious tone on guidance overshadowed first-quarter results that beat on both the top and bottom lines.
GE chief executive Lawrence Culp said the company is "trending toward the low end" of its guidance provide in January, citing inflation pressures and the war in the Ukraine.
3M (NYSE:MMM) also reported better-than-expected quarterly results, but flagged rising cost pressures and weaker demand for masks ahead that could keep a lid on growth. Its shares were down nearly 3%.
Energy, bucked the broader trend lower, as oil prices rose back above $100 a barrel as demand fears ease somewhat after China said it would support economy as another lockdown potentially looms.
The wave of earnings so far has failed to impress investors as inflation has shifted from a tailwind for stocks to a headwind, pressuring expectations about future earnings.
"Earnings revisions breadth for the S&P 500 has resumed its downtrend over the past 2 weeks and is once again approaching negative territory (which would mean more downward than upward out-year EPS revisions)," Morgan Stanley (NYSE:MS) chief equity strategist Mike Wilson wrote in a note Monday.